6 things home insurance won’t cover

6 hazards home insurance doesn’t
cover

When disaster strikes your home, home insurance is supposed to be there to
help you pick up the pieces. Most of the time, it does.

But the coverage does have limits, says Carole Walker, executive
director of the Rocky Mountain Insurance Information Association,
an industry group based in Greenwood Village, Colo.

“Many people don’t take the time to understand what is and isn’t
covered and mistakenly assume insurance will pay for any type of
damage,” Walker says.

A Bankrate survey found that 81 percent were aware flooding is
not covered by regular homeowners insurance. You may have heard
earthquakes also require special coverage. Yet you may not know
that there are other types of damage that are excluded from most
policies as well.

Walker says many policyholders learn about the exclusions the
hard way.

“We often hear from people that the only time they think about
what their insurance covers is when they go to file a claim,” she
says. “Of course, then it’s too late.”

Following are six hazards a standard home insurance policy may
not cover.

ADVERTISEMENT

Mold

At least 1,000 species of mold are common to the United States,
according to the New York-based trade group the Insurance
Information Institute. A breakout of splotchy mold on walls not
only looks disgusting but also is a health risk that the Centers
for Disease Control and Prevention says can bring about symptoms
similar to allergies or even breathing difficulties.

Some insurers offer an endorsement to expand coverage limits for
mold claims but only if you are willing to pay more for your
insurance, she says.

The best cure for mold is to prevent it from growing in the
first place. If the basement floods after a rainstorm or a pipe is
leaking, eliminate the moisture promptly, Worters says.

“Even a spill on the carpet should be dried within 24 to 48
hours,” she says.

ADVERTISEMENT

The U.S. Environmental Protection Agency says homeowners
generally can clean up mold themselves if the affected area is less
than about 10 square feet. Otherwise, it is best to call in an
expert.

Sewer backup

America’s sewer lines are rapidly aging, with some more than 100
years old. As more homes have been connected to these out-of-date
lines, sewage backups have followed.

Other sources of backups include pipelines that handle both
stormwater and raw sewage — and become overwhelmed in rainstorms —
and blockages from tree roots that work their way into sewer-line
cracks.

When a sewer backs up into a home, it can damage floors, walls,
furniture and electrical systems.

Walker says standard homeowners insurance does not cover sewer
backups. If you are worried about being unprotected, she has some
advice.

ADVERTISEMENT

“Consider extra insurance that may be available as endorsements
to your policy for risks such as sewer backups,” she says.

The Insurance Information Institute says sewer-backup damage
often can be covered for an additional premium of just $40 to $50
per year.

Sinkholes

Sinkholes can seem like something out of a horror movie. For
example, there was the Florida man who was swallowed up in early
2013 when a sinkhole opened without warning beneath his
bedroom.

Sinkholes are sudden gaps in the earth’s surface that occur
after groundwater gradually dissolves rock such as limestone and
carries bits of it away, creating large pores and cracks in
bedrock. Once large cavities form underground, the land above it
may suddenly settle or collapse, creating the sinkhole.

In the United States, sinkholes tend to cause the most problems
in Florida, Texas, Alabama, Missouri, Kentucky, Tennessee and
Pennsylvania, according to the U.S. Geological Survey.

ADVERTISEMENT

Most home insurance policies will not cover damage associated
with “earth movement,” such as an earthquake or sinkhole.

“Florida is the only state in which insurers are required to
provide coverage for sinkhole damage,” Worters says.

Florida insurers must include insurance for “catastrophic ground
cover collapse” — which refers to damage so severe, the home is
uninhabitable — as part of standard homeowners insurance.

Worters adds that in Tennessee, insurers must offer optional
sinkhole coverage for an additional price.

“In every other state, earth movement is excluded from the
insurance policy,” she says.

Termite infestation

Colonies of anywhere from a few hundred to several million
termites can quietly and methodically devastate your home.

Wood, paper and dead plant material that is in contact with soil
near the house provides termites with a ready source of food and an
entry. And moisture accumulated around foundations and in poorly
ventilated crawl spaces gives termites a source of water they need
to survive.

Over time, termites can damage or destroy support beams and
other wood features in a house. The National Pest Management
Association estimates that termites cause $5 billion in damage in
the U.S. each year.

If these unwanted guests cause wear and tear to your home, do
not expect your insurer to bail you out, says Janet Patrick, a
spokeswoman for the Illinois Insurance Association, an industry
lobbying organization in Springfield, Ill.

“Homeowners policies do not pay for termite damage,” she
says.

For that reason, Patrick recommends having a licensed pest
control company take a look at your home to make sure it is
termite-free.

“Homeowners can avoid structural damage with early
intervention,” she says.

Nuclear plant accidents

The Federal Emergency Management Agency, or FEMA, says nearly 3
million Americans live within 10 miles of an active nuclear power
plant. If an accident at a nearby reactor leaves your home
uninhabitable, standard homeowners insurance will not cover the
claim. But that does not mean you will be unprotected.

A 1957 federal law called the Price-Anderson Act compensates
people in the United States for any damage or injuries resulting
from a commercial nuclear accident.

The law was called upon after the nation’s worst nuclear
accident, at the Three Mile Island plant near Harrisburg, Pa., in
1979.

“The insurance paid for the living expenses of families who
decided to evacuate,” Worters says.

The Nuclear Regulatory Commission says an insurance pool of more
than $12 billion is available to pay out claims.

Claims covered under Price-Anderson include:

Bodily injury.

Sickness.

Disease resulting in death.

Property damage and loss.

In addition, individuals evacuated from an affected area can
expect reimbursement for reasonable living expenses beyond what you
ordinarily pay. “The coverage does not pay your mortgage,
does not pay for your normal food bills,” Worters
explains.

Some acts of terrorism

The recent Boston Marathon bombings were a reminder that terror
can strike at any moment.

The Insurance Information Institute says terrorist attacks using
nuclear, biological, chemical or radioactive weapons are considered
“acts of war” that are fundamentally uninsurable. Standard home
insurance policies do not specifically reference terror attacks,
Worters notes.

“However, the policy does cover the homeowner for damage due to
explosion, fire and smoke,” she says, adding that these are the
most likely types of damage a home would suffer in a terrorist
incident.

If you own a condominium or co-op, the policy you carry on your
individual unit will protect your structure and possessions from
damage related to a terrorist attack.